Understanding Creating Cost-Plus Government Contract Lines

This section discusses:

• Creating cost-plus government contracts.

• Cost-plus contract line accounting distribution.

• Project and activity assignments for cost-plus contract lines.

Government contracts are awarded based on bids submitted to the government that contain a company's estimated costs and rates for performing the contract. Once awarded, contractors must be able to effectively manage their costs and fees so that they stay within the terms and conditions outlined in the contract. This helps ensure that the contractor is appropriately reimbursed for their costs, and any fees that they receive represent a sufficient profit for their services.

To ensure that they receive proper payment for their services, government contractors track, calculate, and report on direct costs, indirect costs, and fees. To accommodate this requirement, PeopleSoft Contracts enables you to define government contracts and associate rate-based contract lines with fee types (cost-plus). After the contract lines are added to the contract, you can define additional terms and conditions, set up accounting distributions, define limits, fee calculation data, projects, activities, and standard or contract-specific rate plans for the contract lines to enable you to bill and recognize revenue for your direct costs, indirect costs, and fees according to the terms and conditions of the contract.